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Mar 3, 2016

The Donald Trump Stock Market

In early 2009, if you bought biotech stocks, you would have made over 400% when the sector peaked in 2015. What was going on in early 2009 that would have clued you in that biotech stocks were going to be a good bet?

Barack Obama. That’s right: Barack Obama was inaugurated president of the United States in January 2009.

Sophisticated investors like me track presidential campaigns to see if a candidate might favor a group of stocks.

It wasn’t any great surprise to find that once Obama’s administration was good for biotech stocks.

That’s because, if you were tracking Obama, you would have seen that his inner circle of advisers had an unusually high number of people who were pro-biotech. And among his closest advisers was a Harvard Law classmate who was an expert in the biotech industry. Obama also spoke very highly of the industry.

The most visible sign of this is the record number of drugs approved in 2015: 45. That’s the highest number of drugs approved since 1996. These drug approvals have been one of the main reasons for biotech soaring higher during Obama’s tenure.

Bottom line: A new body in the White House often leads to shifts in which sectors and industries are expanding and which are contracting. As we stare down at a new presidential election, now is a good time to start planning for another shift in the stock market so you are well-positioned to profit…

Presidential candidates from both parties have bombarded us with all kinds of ads. But, for a pure investor, who simply wants to make money without worrying about politics, you have to keep your focus on things that a presidential candidate might actually get done if they get elected.

So, if you look at the presidential campaigns in this light, you’ll hear candidates giving glimpses of their policies and the industries and companies that are most likely to benefit. And that’s a chance for you make big money in the stock market.

Blue-Collar America Is Trump Nation

This week, I want to look in on the candidate who has shaken up this election cycle. Love him or hate him, Donald Trump stands a good chance of becoming president of the United States, particularly following his triumph on Super Tuesday when he clenched seven of the 11 states.

If you’re following the election closely, you know that Trump’s base of voters has some very specific characteristics.

First, research shows Trump’s voter base lives in rural America, rather than in the cities.

Studies show that the people most attracted to Trump have seen stagnant wages for 15 years, and have seen almost no improvement in their financial condition since the 2008 financial crisis.

A Washington Post poll has 50% of people making less than $50,000 a year voting for Trump.

Last thing, a CNN survey shows that 46% of people supporting Trump don’t have college degrees.

In short, a significant number of Trump voters are people who are Blue-Collar America. People who work in construction and manufacturing — not offices.

Trump voters represent a huge slice of America, and their support is going to give him a chance to be the next president of the United States.

Donald Trump Will Goose U.S. Manufacturing and Infrastructure

Now, if Donald Trump wins, you can expect him to do things to benefit the people who elected him, just like every president.

That means you should expect President Trump to follow through on some of the big things that he’s been saying during the campaign.

One of Trump’s top promises is to negotiate much better trade deals so that we get to sell more stuff that we are making in the United States. If Trump’s trade deals are better, it would lead to increased selling of U.S.-made products around the world. More U.S.-made stuff sold around the world would mean more jobs for people who are voting for Trump.

Companies such as General Electric and 3M still make their products in the United States. For people who work on the factory floor at these companies, that’s good because they could get higher salaries when these companies end up having more business.

Donald Trump also says he wants to rebuild the infrastructure in the United States.

Building infrastructure is good for the people who are voting for Trump, because people without college degrees fill many infrastructure positions.

Second, by increasing the number of non-college jobs, the demand for employees is going to go up. Rising demand for employees often results in salaries climbing — a big issue for many potential Trump voters.

If Trump Keeps Winning … This ETF Is Going Up

Making a long story short, a Donald Trump presidency will likely result in policies that benefit Blue-Collar America by boosting construction and manufacturing.

And that’s going to create a great opportunity on Wall Street, because these companies will end up with more sales and report stronger earnings because of Trump’s policies.

This exchange-traded fund (ETF) is composed of companies such as General Electric and 3M — businesses that are going to benefit from Trump’s get-tough trade policies with China and Mexico. This ETF comprises companies such as Caterpillar and Jacobs Engineering Group, which are going to benefit from Trump spending money on rebuilding America’s infrastructure.